Ok so I kinda sorta got the pinion shims squared away... Dana manual and factory workshop manual both show shims going between bearing and pinion head.
but let's make things more complicated and confusing!
Dana light axle application catalog for 1999-2005, for the Model 35/194, shows the carrier shims between the bearings and carrier; number 24:
Ford factory workshop manual for a 1997 Explorer, shows carrier shims going outside the races, between the race and housing; number 27:
so there were shims between the bearings and carrier, measured the total shim pack and was around .050. Although I cannot, for the life of me, remember if there were shims outside the races; although I don't believe so.
But that would make sense, since I was only able to squeeze ~.064 in there.
Still makes me wonder... which do I follow? Ford or Dana?